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Mortgage Life Insurance: Is It Right For You?

There’s nothing that makes a person feel more like a grownup than signing mortgage papers. While you might have been diligently paying the rent on your home for many years, when you actually decide to buy a house or apartment, the feeling of responsibility is extraordinary. You’ve chosen a new home based upon your needs and hopes for the future, to fit the existing needs of your family, and perhaps with room for additions to your family. You’re also committing to your new home for decades, which can be a slightly unsettling thought. When you’ve been approved for a mortgage, you might find that your bank or financial institution offers (or even recommends) mortgage life insurance. But what is this? And do you even need the added cost?

What Is Mortgage Life Insurance?

Essentially, mortgage life insurance ensures that in the event of your death or incapacitation, your mortgage will continue to be paid. The price seems low, and it’s simply tacked onto your monthly mortgage repayments, giving you peace of mind that your family won’t be tossed out onto the street if they’re not able to cover the cost of the mortgage. Sure, the price is low, but add it up over the term of your mortgage and the price suddenly isn’t so attractive. So do you really need it?

Who Benefits From Mortgage Life Insurance?

Certainly, there’s an added peace of mind for you, but remember that this insurance is usually being offered to you by the same bank or financial institutions that have provided your mortgage, so it’s entirely possible that the terms are weighted in their favor. The repayments on most mortgages decrease over time, and yet the premiums for mortgage life insurance remain the same for the duration of the agreement. It can be smart to have some kind of protection in the form of insurance, but mortgage life insurance isn’t the only answer.

What Are Some Other Options?

There are a vast array of insurance products on offer, and mortgage life insurance is just one option. Mortgage life insurance can be inflexible, since it usually just covers your mortgage, only ensuring that you meet your obligations to the bank. In the event of your death or incapacitation, your family will still need money, and mortgage life insurance won’t provide any kind of cash for your family. Perhaps you should consider a life insurance policy that covers any obligations to your bank, while still paying an amount to your beneficiaries should the worst happen to you. If you’re worried about your banks impartiality, then perhaps you can engage an independent financial broker.

Owning your home is a huge step in anyone’s life, and the benefits of mortgage life insurance can seem like a godsend, particularly when you look at the amount you’ll have to pay each month, and how long you’ll need to keep paying it. Mortgage life insurance is a great, straightforward product that works for a lot of consumers, although it’s not the best choice for everyone. You’re an individual, and so it’s always wise to explore what else is out there, in order to find something that’s best suited to your individual needs.

Author bio
This is a guest post by Lilly Sheperd. An occasional blogger, mostly interested in business and insurance related articles.

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